CVP-sensitivity analysis.Joan's Beauty College is considering introducing a new nail design seminar to run on an annual basis with the following price and cost characteristics:

Required:
a.What enrollment enables Joan's Beauty College to break even?
b.How many students will enable Joan's Beauty College to make an operating profit of $30,000 for the year?
c.Assume that the projected enrollment for the year is 600 students for each of the following situations:
(1)What will be the operating profit for 600 students?
(2)What would be the operating profit if the tuition per student (that is,sales price)decreased by 10 percent? Increased by 20 percent?
(3)What would be the operating profit if variable costs per student increased by 10 percent? Decreased by 20 percent?
(4)Suppose that fixed costs for the year are 10 percent lower than projected,whereas variable costs per student are 20 percent higher than projected.What would be the operating profit for the year?

Question

CVP-sensitivity analysis.Joan's Beauty College is considering introducing a new nail design seminar to run on an annual basis with the following price and cost characteristics:
  
Required:
a.What enrollment enables Joan's Beauty College to break even?
b.How many students will enable Joan's Beauty College to make an operating profit of $30,000 for the year?
c.Assume that the projected enrollment for the year is 600 students for each of the following situations:
(1)What will be the operating profit for 600 students?
(2)What would be the operating profit if the tuition per student (that is,sales price)decreased by 10 percent? Increased by 20 percent?
(3)What would be the operating profit if variable costs per student increased by 10 percent? Decreased by 20 percent?
(4)Suppose that fixed costs for the year are 10 percent lower than projected,whereas variable costs per student are 20 percent higher than projected.What would be the operating profit for the year?

Quizplus · Accepted Answer

The Answer of CVP-sensitivity analysis.Joan's Beauty College is considering introducing a new nail design seminar to run on an annual basis with the following price and cost characteristics:
  
Required:
a.What enrollment enables Joan's Beauty College to break even?
b.How many students will enable Joan's Beauty College to make an operating profit of $30,000 for the year?
c.Assume that the projected enrollment for the year is 600 students for each of the following situations:
(1)What will be the operating profit for 600 students?
(2)What would be the operating profit if the tuition per student (that is,sales price)decreased by 10 percent? Increased by 20 percent?
(3)What would be the operating profit if variable costs per student increased by 10 percent? Decreased by 20 percent?
(4)Suppose that fixed costs for the year are 10 percent lower than projected,whereas variable costs per student are 20 percent higher than projected.What would be the operating profit for the year?

CVP-Sensitivity Analysis